Synchronous Condenser Market Size, Share & Trends Analysis Report By Cooling Type (Air-cooled, Water-cooled, Hydrogen-cooled), By Starting Method (Static Frequency Converter, Pony Motors), By Power Rating (Up to 200 MVAR, Above 200 MVAR), By Application (Utility, Industrial) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global synchronous condenser market size was valued at USD 706.7 million in 2023 and is projected to reach a value of USD 954.8 million by 2032, registering a CAGR of 3.4% during the forecast period (2024-2032). Increased investments in power infrastructure to improve grid reliability drive the synchronous condenser's market share.

A synchronous condenser is a revolving machine used in electrical power systems to control voltage, enhance power factor, and provide reactive power support. Despite its name, a synchronous condenser does not generate electricity but instead functions as a motor with no mechanical load attached. Instead, it is synced with the grid and adjusts its reactive power production to maintain voltage levels.

The global market is primarily driven by increased product demand for updating and stabilizing electrical networks. In line with this, there is considerable growth in integrating renewable energy sources, such as wind and solar, into the power grid, boosting the market. Furthermore, with the increasing complexity of power grids and the growing number of possible disruptions, maintaining stability and dependability is critical, driving the market. Furthermore, increasing aging infrastructure replacement activities in emerging economies drives market expansion.

Furthermore, rising urbanization and industrialization in various world regions are increasing power consumption, boosting the demand for more complex and dependable electrical grids. Moreover, improvements in smart grid technology, such as smart meters and grid automation, are considerably improving the efficiency and reliability of power distribution, hence driving market growth.

Highlights

• Hydrogen-cooled accounts for the largest share of the market by cooling type.
• Static Frequency Converter led the market by starting method.
• The above 200 MVAR influenced the market through its power rating.
• Utility dominates the market by application.

Market Dynamics

Global Synchronous Condenser Market Drivers

Aging Grid Infrastructure

Many power grids worldwide are aging and require upgrades to improve reliability and efficiency. Synchronous condensers are critical to modernizing grid infrastructure because they regulate voltage, compensate for reactive power, and provide inertia. Utilities and grid operators invest in synchronous condenser installations to increase grid stability, reduce transmission losses, and address voltage stability issues caused by aging infrastructure.

According to the American Society of Civil Engineers' (ASCE) 2023 Report Card for America's Infrastructure, the US energy infrastructure received a "C-," indicating significant deficiencies and vulnerabilities. According to the report, power outages cost the US economy between USD 28 and USD 169 billion annually. Power outages can also be extremely dangerous for residents, hospitals, and nursing homes. According to a study by the United States Energy Information Administration (EIA), nearly 70% of the transmission lines and transformers on the US power grid are over 25 years old. This aging infrastructure is prone to failures, outages, and voltage instability, which reduces grid reliability and performance.

Additionally, Europe's electricity industry has warned that unprecedented investments are required to upgrade aging power grids, or the EU will fail to meet its clean energy targets. The European Union's climate change plans call for millions more electric vehicles on European roads by 2030, as well as a massive expansion of renewable energy and using electric heat pumps to replace fossil fuel boilers in homes.

Moreover, utilities and grid operators worldwide invest billions of dollars in modernization projects to address aging infrastructure issues. In 2023, the US Department of Energy (DOE) will launch the Grid Modernization Initiative (GMI), a partnership between the DOE and national laboratories to modernize the electricity grid. The GMI's goal is to develop a grid that can meet the needs of the twenty-first century and beyond. In 2023, the DOE announced up to USD 39 million in funding for the GMI lab call for proposals. 

Global Synchronous Condenser Market Restraints

High Cost

The large initial expenditure required for synchronous condenser installation and commissioning is a significant obstacle to wider use. Synchronous condensers require significant capital investment, which includes equipment procurement, engineering, construction, and grid integration costs. Utilities and grid operators may hesitate to invest in synchronous condenser projects, particularly in regions with limited budgets or competing infrastructure priorities. The cost of a synchronous condenser is determined by several factors, including the unit's size. For example, a 50-70MVA synchronous condenser may be adequate to counterbalance detrimental system strength implications from a 200MW installation, costing USD 15-20 million.

Additionally, when considering grid stability options, utilities frequently compare the economics of synchronous condensers to other technologies, including static var compensators (SVCs), static synchronous compensators (STATCOMs), and battery energy storage systems (BESS). While synchronous condensers have advantages, such as inertia support and high power capacity, they may have greater initial costs than other alternatives, especially for smaller-scale projects or applications with specialized technical requirements.

Furthermore, utilities and grid operators often conduct comprehensive cost-benefit analyses and risk evaluations to determine the viability of synchronous condensers. Investment decisions are evaluated based on project complexity, technical viability, regulatory compliance, and stakeholder engagement. Balancing the upfront expenses of synchronous condenser installations with the long-term advantages of grid reliability and performance is crucial to project success and maximizing the value of grid modernization expenditures.

Global Synchronous Condenser Market Opportunity

Renewable Energy Integration

As the world moves toward a more sustainable energy future, renewable energy sources such as wind and solar are increasing. Synchronous condensers provide valuable grid support services such as voltage regulation, inertia support, and reactive power compensation, making them essential for dealing with renewable generation variability and intermittency. The growing number of renewable energy projects presents an excellent opportunity for the synchronous condenser market to expand its footprint and provide critical grid stability services.

According to the International Renewable Energy Agency (IRENA), global renewable energy capacity in 2023 will be a record-breaking 3,870 gigawatts (GW). This represents a 50% increase over 2022, the 22nd consecutive year renewable capacity additions have set a new record. Renewables accounted for 86% of capacity additions, with Asia dominating the expansion with 69% (326 GW).

In addition, the growing use of variable renewable energy (VRE) sources, such as wind and solar power, challenges grid stability and reliability. In many regions, VRE penetration levels have exceeded initial projections, posing grid integration challenges and necessitating grid stabilization solutions. By 2023, the share of variable renewable energy (VRE) in the global electricity mix is expected to rise from 5-10% to 10-20%. The amount of renewable energy capacity added to energy systems worldwide increased by 50% in 2023, reaching nearly 510 gigawatts (GW), with solar PV accounting for three-quarters of the total.

Moreover, synchronous condensers help to integrate renewable energy by providing grid stabilization services. By adjusting reactive power output, synchronous condensers help to mitigate voltage fluctuations, maintain grid frequency, and improve grid resilience, ensuring the grid's reliable and stable operation.

Regional Analysis

Asia-Pacific Dominates the Global Market

The global synchronous condenser market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

Asia-Pacific is the most significant global synchronous condenser market shareholder and is estimated to grow at a CAGR of 3.5% over the forecast period. The Asia-Pacific region dominated the market throughout the projection period because of increased investments in Utility and expansion across these regions. Industrialization is also on the rise in this region. As the number of such condensers installed in the market grows, so does the need for them.

Furthermore, the growing demand for synchronous condensers for grid modernization, clean power supply, and expanding economies drives India's synchronous condenser market. End customers are more likely to utilize synchronous condensers when there is a consistent supply of power in large quantities that is safe and efficient. Government programs, plans, and regulations to promote renewable energy drive the demand for power in commercial and industrial uses. The power sector uses updated grid stability to support power with sustainability, boosting the Indian market. 

North America is anticipated to exhibit a CAGR of 3.8% over the forecast period. This region is seeing a surge in demand for such condensers as outdated power facilities are being converted to them. Condensers help to improve power line voltage regulation in power-producing plants. The synchronous condenser market in the United States is quickly expanding as the country's grid operations become more sustainable. The Biden-Harris administration has announced a USD 3.5 billion investment in America's electric grid, which would increase clean energy deployment while lowering costs. Power generators and transformers are being supported by increasingly complex technologies to meet the needs of consumers. 

The European region is expected to grow during the projected period. Europe is seeing a significant demand for condensers to manage voltage variations in power plants. Increased hydropower and wind power sources are expanding synchronous condenser products in the United Kingdom. In 2023, wind power accounted for 29.4% of UK electricity generation, up 4% from the previous year. This became wind the UK's largest clean energy source, accounting for more than 60% of the country's renewable electricity. Hydropower, including tidal, supplied 1.8% of the renewable mix. Power grids are combined with solar and clean energy to ensure power stability and increase end-user demand. Condenser technology for generating power at sea is widely connected with the national grid to improve the country's renewable energy sources. 

The Latin America region is expected to grow during the projected period. Demand and adoption of such condensers are high in this region due to rising energy demand and increased demand from the utility segment in the market. 

The Middle East and Africa region is expected to grow during the projected period. The need for these condensers is increasing in this region as the government tightens rules to boost renewable energy while reducing nuclear and fossil fuel energy sources.

Segmental Analysis

The global synchronous condenser market is segmented based on cooling type, starting method, power rating, and application.

The market is further segmented by cooling type into Air-Cooled, Hydrogen-Cooled, And Water-Cooled.

The hydrogen-cooled category is expected to lead the market throughout the projected period due to its unique qualities, which include high specific heat, low density, and high thermal conductivity. This raises market demand for hydrogen-cooled condensers. Hydrogen-cooled synchronous condensers use hydrogen gas as a cooling medium, dissipating heat more efficiently than air or water. Hydrogen has good thermal conductivity, which enables effective heat transfer and cooling of the stator and rotor windings. Hydrogen-cooled synchronous condensers are widely utilized in large-scale power plants and utility substations that demand high power ratings and continuous operation. 

The air-cooled category is expected to expand rapidly during the projected period. Air-cooled synchronous condensers disperse heat generated during operation with ambient air. These condensers usually have fans or blowers that circulate air over the stator and rotor windings to remove heat. Air-cooled synchronous condensers are extremely simple to construct, need little maintenance, and are ideal for applications with limited water availability or infrastructure. Such types of condensers are becoming increasingly popular in the market.

Based on the starting method, the market is fragmented into Static Frequency Converter and Pony Motors.

The static frequency converter category will dominate the market over the forecast period. The Static Frequency Converter starting method uses electronic converters to regulate and manage the frequency and voltage of the electrical power provided to the synchronous condenser during startup. SFCs convert incoming AC power from the grid into DC electricity, which is then converted back to AC power with the requisite frequency and voltage levels to start and synchronize the synchronous condenser. This approach allows for exact control over the startup process, resulting in smooth synchronization and operation of the synchronous condenser with the grid. Static frequency converters are ideal for applications that require accurate frequency and voltage control, such as large-scale power plants and utility substations. 

The pony motors segment is predicted to develop over the forecast period. The Pony Motors starting method uses auxiliary motors, often known as pony motors, to rotate the rotor of the synchronous condenser to a near-synchronous speed before connecting it to the grid. Pony motors supply the initial mechanical energy required to overcome the rotor's inertia and get it to synchronous speed. This motor is a small, usually induction motor that drives the rotor close to synchronous speed. With these advantages, this motor is in high demand on the market.

Based on power rating, the market is sub-segmented into Up to 200 MVAR and above 200 MVAR.

The market with more than 200 MVARs is expected to dominate over the projection period. Synchronous condensers with more than 200 MVAR power ratings are intended for large-scale grid stabilization applications and utility-scale installations with high reactive power requirements. These high-power synchronous condensers are used in transmission substations, power plants, and interconnection points. Significant reactive power support is required to maintain grid stability, promote renewable energy integration, and ensure the transmission network's reliability. The market is seeing a substantial increase in the installation of condensers larger than 200 MVAR since they are highly efficient and compatible with various applications. 

The category of up to 200 MVAR segments is expected to grow significantly over the projected period. Synchronous condensers with a power rating of up to 200 MVAR (Mega Volt-Ampere Reactive) are commonly utilized in small-scale grid stabilizing applications or facilities with minimal reactive power requirements. Such condensers are in high demand in electric utilities and industry because they are highly dependable for small-scale applications.

By application, the market can be further bifurcated into Utility and industrial.

The utilities category is expected to dominate the market over the forecast period. These condensers are widely employed in utilities because they improve grid reliability, inertia, and stability. The utility market is seeing increased investment and installations of such condensers. Synchronous condensers aid in increasing grid stability and managing voltage fluctuations, which are critical in the utility sector. This fosters growth in the utility segment over the predicted period. 

The industrial segment is expected to develop over the forecast period. The industrial segment is seeing an increase in demand for these condensers. Industrialization is quickly expanding throughout critical regions, and investment in such places is increasing to develop the industrial section.

Recent Developments

• February 2024- ABB acquired SEAM Group to enhance its electrification service offering.
• March 2024- ABB supplied a third synchronous condenser to help the Faroe Islands continue their transition to renewable energy.
• April 2024- Siemens released Electricity X, strengthening the Siemens Xcelerator offering in buildings, electricity, and grids.
• April 2024- Mitsubishi Electric transferred its distribution transformer business to Hitachi Industrial Equipment Systems.